Personal Finance & Money Asked on May 13, 2021
One of my colleagues got scammed for $14,000 by one of the Apple Gift Card scams.
He paid $4,000 in Cash for Gift Cards and bought the other $10,000 worth by maxing out a credit card.
He’s gone ahead and registered a complaint with NYPD and is considering opening a dispute with the Credit Card company. My question is, does he have any grounds for opening up a dispute and what are the chances of it being resolved in his favor.
More details for context and the story as narrated by him on the lunch table today. He got a call on Friday in the afternoon from NYPDs Official Number (This was flagged as such by Truecaller) telling him that his SSN would be blocked as they suspected him or his acquaintances to be involved in human trafficking in Texas and that he would not be able to access any funds. They suggested to him to withdraw cash and to convert it to Apple Gift-Cards. He went to an Apple store in NYC (Grand Central) after withdrawing the max allowance from his bank ($4000) and bought Gift-Cards, when asked by the cashier at the store as to why he was buying gift cards of such a high denomination. He told him that it was for personal use.
He then takes the subway to WTC (Apple Store in the Oculus) and maxes out one of his credit cards, same story with the cashier. After this he gets another call from the scammers who ask him for the gift card numbers on the pretext of keeping a record of the serial numbers to help him convert them back to cash later. They advice him to use the other credit cards that he has and do the same thing. At this point he tries again at the WTC store and his Chase card gets declined for suspected fraudulent activity. The other cashier at the Apple Store advices him that this is a very common scam and alarm bells finally ring for him and to his horror the balance of all the gift cards had been drained.
He then goes to NYPD and registers a formal complaint, calls Apple who tell him that the gift cards have been used and that they can share more details with the police if they contact them officially. He also called his credit card company to ask them why they didn’t decline the $10,000 transaction and how he can dispute the transaction. They advice him to contact them again in a couple of days after the transaction settles and advice him that it will take a couple of months to complete the investigation. In the meantime he doesn’t need to pay the $10,000.
The specific question here is that since he went and used the card in person at the store, then lied to the associate who asked him why he was buying gift cards of such a high denomination on the instructions of the scammers; does he really have a case for disputing the transaction? Is this not similar to being responsible for transactions made by another authorized user?
I understand if his card had been skimmed and then used, that would be a clear cut case of fraud and he’d have no liability.
I Work as a dispute specialist for a credit card company. I handle cases like these all the time and it's a terrible thing to have seen happen to people. We advise cardmembers to look into sources outside of their credit card company. As previous comments have mentioned, Your friend knowingly got himself into a transaction and the services have been rendered to him. Credit card companies do not have a direct line of communication w/ the scammer. Only where the purchase was made Kroger, Walmart, etc). I would reccomend having your friend reach out to his local attorneys general office and also the Gift card company to see if they have any procedures for third party scams. Rarely I see a dispute from this turn out in the card members favor. The only time is if the merchant accepts financial liability for the charge prior to arbitration. But these cases never make it to arbitration even if the merchant does not accept financial liability.
Correct answer by HAYDEN KELLY on May 13, 2021
He can dispute the charges, but I don't think he has a strong case to, so I'd expect the dispute to resolved in the merchant's favor. In my view (this is subjective of course), the fraud occurred between your friend and the person he gave the gift cards to. The merchant may have some legal responsibility to guard against common scams, but I expect their liability to be pretty limited. You even say that they asked him about the high denominations, and that he lied about their purpose. I think if he had told the truth in that moment, they probably would have warned him about potential scams, but he didn't, so they're probably pretty well within their legal responsibility to warn him.
Answered by Cody on May 13, 2021
I don't think he has much of a chance to dispute the credit card charges. He paid $10,000 for gift cards, and he received $10,000 worth of gift cards. There's nothing wrong with these cards, the merchant has delivered what he paid for, and the gift cards have been used, so he cannot return them.
For Apple, there was a scam, and they will do what they can to help police with their investigations. One of the things that the police and credit company will consider is a purchaser who bought the cards, re-sold them, then tried to issue a chargeback or claim fraud so they nearly double their money. That may not have happened here but it is an example of the kind of secondary fraud that police and credit companies will watch for. Your friend is honest (though naive) but the police and credit company don't know that and deal with bigger scammers and will ask a lot of questions to ferret out secondary frauds while helping innocent victims.
PS. From Apple's website:
Apple Gift Cards are solely for the purchase of goods and services from the Apple Store, the Apple Store app, apple.com, the App Store, iTunes, Apple Music, Apple TV, Apple Books, and other Apple properties. Should you receive a request for payment using Apple Gift Cards outside of the former, please report it at FTC Complaint Assistant (Opens in a new window). Learn more about Apple Gift Card scams (Opens in a new window)
Answered by gnasher729 on May 13, 2021
I don't think your friend has any case at all for making a chargeback - he got exactly what he paid for. And we ALL pay for bogus chargebacks.
The more interesting point is whether or not gift card merchants have some responsibility here. The general public is rather naive about gift card scams; such scams are common but rarely discussed until someone you know has been scammed.
Gift cards are used on a particular site, either by the scammer or by a third party who buys the card at a discount. Why do these sites not demand - and verify - documentation from the customer before the card can be used? Why are the cards not covered with large warnings about how no legitimate business will take payment by a gift card?
Answered by George on May 13, 2021
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